Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services

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[Logo: BRB - BANK OF THE REPUBLIC OF BURUNDI]

BANK OF THE REPUBLIC OF BURUNDI

REGULATION No. 001/2019 ON THE PROTECTION OF CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

STATEMENT OF REASONS

The ever-growing complexity and diversity of the range of products and services offered by financial products and services providers in Burundi require enhanced protection for consumers of these services.

Indeed, in the offering of financial products and services by providers, the Bank of the Republic of Burundi is fully aware that the risks of fraud, abuse, and misconduct, to the detriment of consumers, especially those who are ill-informed or poorly advised regarding their rights and obligations, cannot be dismissed.

Thus, the establishment of a consumer protection framework for financial products and services strengthens the knowledge and fundamental rights of these consumers, constitutes a major source of discipline within the financial sector, and stimulates competition by encouraging financial products and services providers to offer better products and services to an informed consumer market.

The existence of a regulatory consumer protection framework is a fundamental asset for increasing access to, use of, and quality of financial products and services, and contributes to the solidity of the financial sector. Consumer protection for financial products and services is a precursor to strengthening trust in the financial sector and contributes to promoting financial inclusion. Furthermore, consumer protection ensures that the benefits derived from increased access to formal financial products and services accrue to both consumers and the national economy as a whole.

Consumer protection efforts aim to harmonize the conditions applicable to financial products and services providers in their relationships with existing and potential clients.

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Confident that, without a doubt, the adoption of good consumer protection practices positively influences the financial sector, the Central Bank hereby enacts this Regulation, with the aim of protecting consumers of financial products and services and thereby ensuring trust in Burundi's financial sector, in accordance with the missions assigned to it and the powers delegated to it, as stipulated by Article 7 of Law No. 1/34 of December 2, 2008, establishing the Statutes of the Bank of the Republic of Burundi. Furthermore, this Regulation refers to the provisions of Law No. 1/17 of August 22, 2017, governing banking activities, which stipulates, notably in its Article 17, that upon the approval of a company, the Central Bank "also assesses the applicant company's ability to conduct its activities within a secure framework. The applicant company must notably equip itself with appropriate means compatible with the proper functioning of the banking system and the payment system in Burundi, ensuring satisfactory protection for its clientele."

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[Logo: BRB - BANK OF THE REPUBLIC OF BURUNDI]

BANK OF THE REPUBLIC OF BURUNDI

REGULATION No. 001/2019 ON THE PROTECTION OF CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

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TABLE OF CONTENTS
CHAPTER I: SCOPE, OBJECTIVE, AND DEFINITIONS ............. 1
CHAPTER II: OBLIGATIONS OF FINANCIAL PRODUCTS AND SERVICES PROVIDERS ................................................................................................. 3
SECTION 1: FAIRNESS IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES ................................................................................................................. 3
SUB-SECTION 1: GENERAL REQUIREMENTS ................................................. 3
SUB-SECTION 2: DEBT COLLECTION ......................................................... 4
SUB-SECTION 3: OPENING, CLOSING, AND MANAGEMENT OF CONSUMER ACCOUNTS ........................................................................................................ 6
SECTION 2: RELIABILITY OF FINANCIAL PRODUCTS AND SERVICES ............... 7
SUB-SECTION 1: UPDATING CONSUMER INFORMATION ................................ 7
SUB-SECTION 2: MECHANISMS FOR STRENGTHENING CONSUMER CONFIDENCE ..................................................................................... 8
SUB-SECTION 3: DIGITAL FINANCIAL SERVICES .................................. 10
SECTION 3: TRANSPARENCY IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES ....................................................................................................... 11
SUB-SECTION 1: INFORMATION AND ADVICE TO CONSUMERS ........................................................................................................................... 11
SUB-SECTION 2: BUSINESS CONDUCT ............................................. 12
SUB-SECTION 3: PRICING OF PRODUCTS AND SERVICES ............... 14
SUB-SECTION 4: MARKETING AND ADVERTISING ......................................... 14
CHAPTER III: HANDLING OF COMPLAINTS AND REMEDIES ........................ 15
SECTION 1: GENERALITIES ............................................................................ 15
SECTION 2: COMPLAINT HANDLING PROCEDURES ..................... 16
SECTION 3: MAINTENANCE OF RECORDS AND REPORTS ON COMPLAINTS .... 17
CHAPTER IV: FINAL PROVISIONS ....................................................... 18

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Having regard to Law No. 1/34 of December 2, 2008, establishing the Statutes of the Bank of the Republic of Burundi; Having regard to Law No. 1/17 of August 22, 2017, governing banking activities; Having regard to Law No. 1/02 of February 4, 2008, on the fight against money laundering and the financing of terrorism; Having regard to Law No. 1/09 of May 30, 2011, establishing the Code of Private and Publicly Participated Companies; Having regard to Law No. 1/01 of January 16, 2015, revising Law No. 1/17 of April 26, 2010, establishing the Commercial Code; Having regard to Law No. 1/01 of January 5, 2016, revisiting Decree-Law No. 1/41 of July 9, 1993, defining hire-purchase operations and provisions applicable to hire-purchase contracts and regulating the conditions for exercising these activities; Having regard to Law No. 1/10 of August 12, 2016, governing conventional movable securities in Burundi; Having regard to Law No. 1/07 of May 11, 2018, establishing the national payment system; Having regard to Regulation No. 001/2018 on microfinance activities in Burundi; Having regard to Regulation No. 001/2017 on payment services and the activities of payment institutions; Having regard to Regulation No. 002/2017 on commercial agents in banking and payment services operations; Having regard to the Foreign Exchange Regulations;

The Bank of the Republic of Burundi hereby enacts this Regulation.

CHAPTER I: SCOPE, OBJECTIVE, AND DEFINITIONS

Article 1: Scope

The provisions of this Regulation apply to:

any provider of financial products and services licensed by the Bank of the Republic of Burundi;
any Agent of a financial products and services provider registered with the Bank of the Republic of Burundi.

Article 2: Objective

The objective of this Regulation is to:

promote good practices among financial products and services providers by establishing minimum consumer protection standards;
promote financial education and increase transparency to enable consumers of financial products and services to make informed decisions in their relationships with providers of said products and services;
strengthen trust in the financial sector by ensuring that financial products and services providers offer quality products and services that meet consumer needs;
encourage financial products and services providers to establish effective mechanisms for handling consumer complaints related to the offering of financial products and services.

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Article 3: Definitions

For the purposes of this Regulation, the following terms shall mean:

Agent: Commercial agent as defined in Law No. 1/17 of August 22, 2017, governing banking activities.
Central Bank: Bank of the Republic of Burundi.
Bank card: card used for:
- withdrawing cash and obtaining other services from an automated teller machine;
- paying for goods and services;
- withdrawing or depositing cash into a bank account via an Agent.
Dormant account: a current account with no activity for a period of six (6) months.
Consumer: any natural or legal person who uses, has used, or intends to use one or more products or services offered by financial products and services providers and their Agents.
Total cost of credit: the total cost paid by the credit applicant, calculated by adding all fees and commissions payable upon the establishment of the credit and during its repayment period. It is the total amount the borrower must repay minus the borrowed principal amount.
Financial products and services provider: any bank, any financial institution, any microfinance institution, any exchange bureau, any payment institution licensed by the Bank of the Republic of Burundi, as well as the National Postal Service regarding financial products and services.
Personal identification number: a password or any other secret code used by a cardholder to access financial services.
Complaint: any written expression of dissatisfaction by a consumer regarding the services provided by financial products and services providers and their Agents.
Advertising: any form of public communication intended to invite or encourage, directly or indirectly, a person to purchase or acquire a financial product or service.

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CHAPTER II: OBLIGATIONS OF FINANCIAL PRODUCTS AND SERVICES PROVIDERS

SECTION 1: FAIRNESS IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES

SUB-SECTION 1: GENERAL REQUIREMENTS

Article 4: Fair and Honest Treatment of Consumers

The financial products and services provider and its Agents must treat their clients fairly at all levels of their relationships. They must act with honesty and integrity in their relationships with consumers and offer them products and services in a manner that strengthens their trust in the sector.

Article 5: Prohibitions

The financial products and services provider and its Agents must not:

a) engage in unfair, deceptive, or aggressive practices such as threatening, intimidating, assaulting, abusing, or humiliating a consumer; b) offer, accept, or demand bribes or other "gifts". The term "gifts" does not include promotional donations or materials provided to consumers in general, or to one or more specific categories of consumers; c) discriminate against a consumer based on sex, race, color, ethnic origin, tribe, place of birth, belief or religion, social status, political opinion, or disability; d) conclude a financial transaction with a consumer without ensuring that the consumer fully understands the nature of the proposed transaction; e) include an abusive or fraudulent clause in a contract with the consumer; g) disguise, minimize, obscure, or conceal an important fact, advertisement, or warning through, among other means:
(i) the use of print with a font size smaller than 12 points; (ii) the description of an important fact, advertisement, or warning in complicated language; (iii) the omission of an important fact or warning.

Article 6: Liability towards Consumers

The financial products and services provider is liable towards consumers and must treat them professionally. It must train, sensitize, and encourage its employees to provide appropriate customer reception and guarantee them prompt service.

Article 7: Professional Services

For the purposes of Article 6, a financial products and services provider is deemed to have lacked professionalism in its services if:

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a) it has taken no measures to:
(i) correctly identify consumers to avoid risks of consumer confusion; (ii) assess the consumer's general understanding and appreciation of their rights and obligations related to a financing agreement, as well as the risks and costs arising from the contract; (iii) obtain an accurate idea of the consumer's credit repayment history; (iv) assess the consumer's debt level; (v) assess the consumer's financial strength. b) after having assessed the consumer, it concluded the credit agreement with the consumer despite prevailing information indicating that:
(i) the consumer did not understand or appreciate the risks, costs, or obligations arising from the proposed credit contract; (ii) concluding this credit agreement would render the consumer over-indebted; (iii) there is no assurance that the activity for which the credit is requested can be successfully carried out. c) after the credit is established, the financial products and services provider does not monitor the use of the granted credit and its recovery; d) there are multiple reasonable complaints registered against it regarding the quality of the financial products and services offered.

The financial products and services provider must design and complete an analysis form enabling it to address the elements mentioned in paragraph a) of this Article.

Article 8: Consumer Over-indebtedness

a) In the process of granting a credit or any other type of financial facility to a consumer, the financial products and services provider must ensure that it does not lead the consumer into a situation of over-indebtedness. b) A consumer is deemed over-indebted if, at the time of determining the credit amount to be granted, there is information indicating that they are or will be unable to meet all their obligations arising from various credit contracts to which they are a party, considering their financial means and obligations.

SUB-SECTION 2: DEBT COLLECTION

Article 9: Collection Procedures

a) Before signing the contract, the financial products and services provider must inform the consumer about the conditions under which the credit is subject to collection procedures. It must not use unfair or abusive credit collection practices against debtors. b) Funds retained as collateral to guarantee the repayment of a credit must be returned to the consumer immediately after the normal settlement of the debt.

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c) In the event of the sale or transfer of a credit portfolio to another financial products and services provider, the selling provider must notify the consumers in writing of the sale or transfer at least thirty (30) working days in advance. This notification must provide adequate information about the purchaser, its contacts, the location for repayment installments, and the consequences of non-repayment. It must also inform consumers that they remain indebted and that the repayment conditions remain unchanged. d) The selling financial products and services provider must agree with the purchaser that the debtors' agreements with the institution remain unchanged.

Article 10: Recovery

a) If the consumer is unable to repay a loan, the financial products and services provider has the right to take measures to recover the amount owed by this consumer, in accordance with the laws and regulations on this matter. b) The financial products and services provider:
(i) may only claim from the consumer fees and expenses actually incurred; (ii) must provide the consumer with a detailed breakdown of the fees and expenses incurred; (iii) may offset the unpaid amount with a credit balance in one or more other accounts opened in the consumer's name in its books and must immediately inform the consumer at their most recent address available to it; (iv) must not recover its debt from a third party, including the consumer's guardian, a family member or friend, or an association of which the consumer is a member, if the third party in question has not signed a guarantee contract in favor of the consumer.

Article 11: Enforcement of Guarantee

The guarantor must be notified immediately upon the first payment default and warned of the enforcement of the guarantee upon the third payment default.

Article 12: Enforcement of Mortgage Guarantees by the Debtor

In the event of non-repayment or misappropriation of the credit, the mortgaged debtor is required, within a period of one year at the latest, calculated from the first formal notice, to sell, on their own initiative, the mortgaged property to satisfy the creditor with the proceeds of the sale.

Article 13: Enforcement of Mortgage Guarantee at the Creditor's Request

Failing sale by the debtor themselves within the timeframes indicated in Article 12 of this Regulation, the creditor may submit a petition for the public sale of the mortgaged property to the President of the Commercial Court, who, by order, shall seize the Director of Land Titles within one month, calculated from the petition, for the purpose of organizing a public sale. In this case, the creditor cannot become the purchaser of the mortgaged property, unless the offered price is lower than the value of the appraisal established at the time the credit was granted.

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SUB-SECTION 3: OPENING, CLOSING, AND MANAGEMENT OF CONSUMER ACCOUNTS

Article 14: Account Opening

a) Before opening an account for a consumer, the financial products and services provider must inform the consumer of the rights and duties related thereto. These include the following information:
(i) the types of accounts and their operating procedures, as well as the required documents; (ii) the normal time required to clear a check or other payment instrument for debit/credit to an account; (iii) the minimum amount required for opening and the minimum balance required, as well as the fees to be paid if the balance falls below the recommended minimum; (iv) the treatment of dormant accounts; (v) the credit interest rate, if it is a deposit account; (vi) the frequency of account statements and any associated fees; (vii) account maintenance fees and their due dates; (viii) the conditions and fees for closing an account at the consumer's initiative; (ix) the conditions for closing an account at the financial products and services provider's initiative. b) The financial products and services provider must request the consumer to provide all necessary elements for identification to avoid risks of consumer confusion. c) The financial products and services provider must request the consumer to provide necessary information on appropriate communication channels (postal, electronic, at the provider's premises, etc.). d) The level of information collected on the consumer must be proportional to the nature and complexity of the product or service sought by the consumer but must be sufficient to enable the financial products and services provider to offer the service professionally.

Article 15: Account Management

a) The financial products and services provider must assist the consumer in managing their accounts and verifying transactions carried out therein. To this end, it must regularly provide account statements to the consumer within a period not exceeding one month, through appropriate channels, notably email or mobile phone, provided that the consumer has provided their email address and/or phone number to the financial products and services provider. b) The account statement must include at least the following information:
(i) the opening balance;
(ii) all transactions carried out on the account and their descriptions; (iii) all credited/debited interest on the account; (iv) all fees and commissions; (v) the closing balance.

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c) Account maintenance fees on a dormant account shall cease to be charged once the account balance is zero and the consumer has no outstanding credit.

Article 16: Account Closure

a) The financial products and services provider must inform the consumer intending to close an account they no longer need about the procedures to follow and the financial implications related thereto. b) Without prejudice to legal provisions regarding account closure and abandoned funds, the financial products and services provider is prohibited from closing a consumer's account without having provided written notice, with acknowledgment of receipt, to their last known contacts, at least fifteen (15) working days in advance, calculated from the date of receipt of this notification, unless:
(i) the financial products and services provider is obliged by law; (ii) the account has not been active for a period of more than ten (10) years and the consumer is unreachable by the financial products and services provider; (iii) the account balance is considered abandoned funds and must be treated as such, in accordance with prevailing laws. c) The financial products and services provider must inform the consumer about the implications of non-use of an account and those of its closure.

Article 17: Free Services

The financial products and services provider must offer consumers the following services without charging fees or commissions:
- account opening;
- account closure;
- account status.
In addition to the aforementioned financial services, the financial products and services provider may establish other financial services to be provided to consumers free of charge.

SECTION 2: RELIABILITY OF FINANCIAL PRODUCTS AND SERVICES SUB-SECTION 1: UPDATING CONSUMER INFORMATION

Article 18: Registration of Consumer Information

a) The financial products and services provider must keep updated information on each consumer, which must contain, at a minimum:
(i) all documents necessary for consumer identification; (ii) the consumer's address, phone number, and other detailed contacts; (iii) all documents and forms of ---

Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services

Lineage: In force